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Nomura Holdings Reassessing Mainland China Business as Losses Mount

TOKYO (Reuters) – Nomura Holdings announced on Thursday that it is currently reassessing its mainland China business, following continued losses at its Shanghai-based securities joint venture. This is another setback for the leading Japanese investment bank’s global expansion strategy.

The majority-owned joint venture has faced challenges in achieving growth since its launch in 2019, primarily due to the impact of the pandemic and a sluggish economy. In 2022, the joint venture reported a loss of 225 million yuan ($30.75 million), following a loss of 84 million yuan in 2021, as disclosed by Nomura’s filings.

The investment bank stated, “With a presence in China for over four decades since 1982, we have consistently sought to contribute to the development of the country’s capital markets and service the evolving needs of clients. That strategy remains unchanged. Having now fully emerged from the pandemic, we are working constructively with our joint venture partners to determine the most viable path for our onshore business to achieve this long-term objective.”

Notably, the headcount of Nomura’s China joint venture has decreased from 281 in July to 259, falling far short of the original target of reaching 500 employees by the end of this year. While the reason for the drop remains undisclosed by Nomura, Bloomberg’s report suggests that the joint venture has implemented job cuts and witnessed several departures after a management reshuffle earlier this year.

This review coincides with Nomura’s efforts to downsize its investment bankers in Hong Kong. According to Reuters, approximately 10 Hong Kong-based bankers, including individuals responsible for China-related deals, have been laid off by Nomura. This trend of layoffs in the Asia investment banking units is also observed within leading U.S. and European banks like Goldman Sachs and Citigroup.

In 2019, Nomura received the final regulatory approval to launch the joint venture, Nomura Orient International Securities, as part of China’s initiative to open up its financial sector to foreign firms. Initially, the joint venture was intended to focus on wealth management and gradually expand into wholesale businesses, including investment banking and trading.

The ownership structure of the joint venture comprises 51% by Nomura, 24.9% by Orient International Holding, and 24.1% by Shanghai Huangpu Investment Holding Group.

The AI legalese decoder can assist in this situation by analyzing legal documents, regulatory requirements, and financial filings related to Nomura’s mainland China business. By leveraging advanced natural language processing and machine learning algorithms, the AI legalese decoder can provide valuable insights and recommendations to Nomura on optimizing its onshore business strategy in China. It can identify potential risks, analyze market trends, evaluate regulatory landscapes, and offer data-driven suggestions to enhance business performance and achieve long-term objectives.

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